Conventional Home Loan
Less Paperwork and Faster Closing Times
What Is A Conventional Home Loan?
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A conventional loan is one where the lender assumes all the risk on the loan as compared to a government-backed loan where a lender guarantee is provided.
- A conventional loan is the most common loan type in today’s marketplace and every mortgage company offers a conventional mortgage.
Definition of a conventional loan:
Conventional Mortgage Loans can be defined as a government-backed loan or a conventional home loan. Government agencies like the FHA (Federal Housing Administration) as well as the Department of Veterans Affairs (VA Loans) insure private lenders against potential defaults. The mortgage home loan insurance is paid for through fees that they collect from the borrowers.
The USDA (United States Department of Agriculture) home loans lends money to lower-income borrowers through their Direct Housing Program. The USDA also guarantees home loans made by private lenders through a different program called the Guaranteed Housing Loans program. In each case the borrowers are responsible for fees that cover the insurance.
Key Benefits Of A Conventional Loan
- More competition for conventional loans creates more competitive rates
- Conventional loans aren't limited by borrower type, location or loan amount
- Conventional loans are offered in both fixed and adjustable rate loans
Some of the main advantages of a conventional loan vs a Government loan like an FHA, VA or USDA loan is that mortgage insurance or what is known as Private Mortgage Insurance (PMI) is cheaper. A conventional loan does not require private mortgage insurance if you put down at least 20%.
Pros And Cons of A Commercial Home Loan
The Pros of A Commercial Home Loan
Loan amounts of up to $484,000 on the average. More in higher cost areas.
No up front Private Mortgage Insurance (PMI)
Mortgage insurance is automatically cancelled after the loan to value drops down to 78% or below.
Low Down Payments – Down to 3%
Most single family residencies qualify.
The Cons of A Commercial Home Loan
More difficult to qualify for a commercial loan than an FHA loan
Slightly higher rates than an FHA loan
Down Payment is higher than an FHA loan
Higher credit score requirement (620-640 typical)
No up front Private Mortgage Insurance (PMI)
Standard Conventional Home Loan Requirements
A Downpayment of 5% on up with a typical down payment of 20%.
A Credit score of 620 plus
Verification of income
Verification of employment
2 years of continuous employment history
A conventional loan is not for everyone. Some of us don’t have the credit score to support a conventional loan and others including luxury clients may not feel comfortable sharing their tax returns. In these cases CambridgeHomeLoan.com has dozens of other loan products to fit everyones individual needs. some of these products include FHA Home Loans, VA Home Loans, USDA Loans, Jumbo Loans, Super Jumbo Loans, Statement Only Home Loans, Asset Only Loans and more. contact 800-826-5077 to discuss your situation.
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